£32m has been committed by the UK government to help fund the restoration of the British Virgin Islands in the aftermath of hurricane Irma. However, according to Private Eye magazine, thousands of UK companies, many with BVI connections, are liable to fines totalling £100m. The Eye quotes articles written on the Naked Capitalism blog by Richard Smith.
As from June last year, under The Register of People with Significant Control Regulations 2016, the person or people controlling a company should be readily identifiable from a register at Companies House. There are loopholes, described here, for anyone prepared to make a false declaration. Even so, around 100,000 companies have failed to meet the deadline for reporting anything at all. In theory, this should land them with a £1,000 fine and a further daily £100 levy.
The trouble is, says the Eye, the law is "effectively unenforceable".
Neither Companies House - whose recently departed chief executive, Tim Moss, took commendable steps to open up corporate data - nor any other part of government has the resources to police the system at a level that would present any sort of deterrent to the world's money-launderers.
Without enforcement action,there is, alas, a danger the new rules do more harm than good. The UK gets extra brownie points for "transparency", so the use of its shell companies becomes a stronger reason for banks looking for excuses to handle questionable money to clear transfers in these companies' names. Until the UK company tax system is policed properly, or it becomes harder to set up a UK shellco (and there is unlikely to be much appetite post-Brexit for either measure), the UK will remain the corporate wild west.
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